Try this...
You may need to set "log on Locally" permissions for FTP users in your local security policy.
Heres what I had to do on a Windows 2000 Server platform. It should be pretty similar for XP.
1. create a new user group account, something like "allowFTP".
2. Make anyone you want to grant permission to access your FTP a member of the "allowFTP" group.
3. Go to "administrator Tools" and open "Local Security Policy"
4. Expand the "local Policies" folder and click on the "user Right Assignment" folder
5. Now in the right pane of the security window, scroll to "Log on Localy" and double it.
6. A new panel pops up. Under the "Assigned to" window, press the "Add" button and select the newly added "allowFTP" group for the list of users and groups and press "OK".
7. Now you will see "allowFTP" listed the "Assigned to" window.
8. Make sure the "Local Policy Setting" box is check and press "OK".
That's it.
You will have to re-apply your local security policies manually for the changes to take effect, otherwise, either reboot or let the policies refresh normaly (which could take some time.)
Ed